Both suspects arrested in the case are residents of Lucknow district, the police said.
An Al Qaeda unit busted in Uttar Pradesh was planning terrorist attacks - including suicide bombings - in crowded areas of Lucknow and other cities in the state, the police said on Sunday.
Two men named Minhaj Ahmed and Maseeruddin, also known as Mushir - both residents of Lucknow district - have been arrested, leading to the discovery of the Al Qaeda-supported 'Ansar Ghazwat-ul-Hind' terrorist cell, the police said.
"ATS (Anti-Terrorism Squad) UP has uncovered a big terror module. The team has arrested two terrorists linked with Al Qaeda's Ansar Ghazwat-ul-Hind. Arms, explosive materials have been recovered in searches," senior police officer Prashant Kumar said at a news conference.
"They were planning explosions at important places, memorials and crowded places, and also to use human bombs before August 15 (Independence Day) in different cities of the state, including Lucknow. For this, they were collecting weapons and explosives," he said.
"The terror activities were being run from Peshawar and Quetta on the Pakistan-Afghanistan border by an Al Qaeda member called Umar Halmandi," Mr Kumar added.
The police said they found explosives and a pistol at the home of Minhaj Ahmed, who is in his thirties and lives in Kakori town of Lucknow district.
Another team carried out searches at the home of Maseeruddin, who is aged about 50, in Mariahu town of Jaunpur district and found a large number of explosives and a cooker set to be used as a crude bomb, they said.
The two men will be presented in court where the police will request to question them in custody.
According to the police, the terrorist module planned attacks on monuments and other public areas, as per preliminary information.
While Minhaj Ahmed and Maseeruddin were playing key roles for the Al Qaeda unit, the group also had people from Lucknow and Kanpur, the police said.